New Jersey's FamilyCare Program: Gov. Christie's Unkindest Cut?

The state can save $9 million by closing FamilyCare to tens of thousands of currently eligible parents.

Gov. Chris Christie’s proposal to trim more than half a billion dollars in healthcare spending from the FY 2012 budget has focused the attention of lawmakers
and advocates on the state’s current efforts to provide insurance for its
most vulnerable citizens.

New Jersey has received national acclaim over the past decade for FamilyCare,
its program to expand Medicaid to reach more poor children and working-class
families. The program depends on federal funding for 65 percent of its costs,
for most patients, but because state funds are required to cover the balance,
FamilyCare has shrunk and grown with the state’s economy.

Now the governor has proposed drastic changes to both Medicaid and FamilyCare that would net the state $300 million in savings. But one small portion of those cuts has become a lightning-rod for criticism and controversy:
The $9 million the state would save by closing the program to tens of thousands of parents now eligible for FamilyCare.

"This is bad policy. It hurts our economy and it hurts our most vulnerable families
at a time when they can least afford it," said Crystal Snedden, Health Care
Campaign Coordinator for NJ Citizen Action, an advocacy organization that has
called attention to the governor’s healthcare budget cuts.

"Any savings we see today, those costs will be exceeded in the future" as uninsured patients are forced to seek care at hospitals and more expensive settings, noted Assembly Budget Committee Chairman Lou Greenwald (D-Camden) at a recent hearing he held on the Medicaid and FamilyCare changes. The Senate health committee is also scheduled to hold a hearing examining the matter today.

Creating KidCare

The program was launched as KidCare in 1998 under former Gov. Christie Whitman, a Republican, in an effort to help those who earned too much to qualify for programs like Medicaid, which is limited to those who earn less than 100 percent of the federal poverty level or $18,500 for a family of three.

For families that earned more but still couldn't afford insurance there was KidCare. It depended on a new federal funding source, created just four months earlier, called the Children’s Health Insurance Program, or CHIP, which provided funding and allowed states to design their own programs to reach more needy residents. (Medicaid is overseen by the federal government and administered by the state, with the costs split 50/50 between the two.)

New Jersey quickly expanded eligibility to the program, allowing more children from moderate-income families, and by the summer of 2000 the program was renamed FamilyCare and opened to parents for the first time. By the following year, more than 120,000 parents had signed up. (The program now covers parents who earn up to 134 percent of the federal poverty level, or about $24,600 for a family of three, and children in families earning up to 350 percent FPL, which is more than $37,000 for three.)

Despite the early growth, the program saw serious cutbacks under former Gov. Jim McGreevey, a Democrat, who also faced a multibillion deficit in his first budget year. The income allowance for adults was reduced and enrollment dropped by more than 100,000 patients in just over three years. The decline was primarily with adults; the program continued to add children, but at a slower pace than before.

In September 2005, the program started growing again, as income limits were raised for parents over the three years that followed. This expansion, launched under former acting Gov. and current Sen. Dick Codey
(D-Essex) and continued under former Gov. Jon Corzine, also a Democrat, added
nearly 165,000 patients to the FamilyCare rolls in five years, 75 percent of them
parents.

The Christie Changes

Now Gov. Christie, a Republican, has proposed changes that – if approved by the federal government -- would save the state more than $300 million by reforming the two programs. This year the state will spend about $5 billion (with another $5 billion coming from the federal government) to insure nearly 1.3 million people through the two programs -- which are often grouped together by state officials since the programs share many similarities in how they are administered. This includes more than 331,000 patients in FamilyCare, just over half of whom are children.

"Like many states, New Jersey is grappling with the ever-increasing costs of
Medicaid," said Commissioner Jennifer Velez, whose Department of Human
Services oversees most of both programs, at a recent legislative hearing on
the reform proposal.

Velez was appointed under Corzine and oversaw part of the program’s expansion during the last decade, but she noted that the state's 2012 budget -- with the loss of over $1 billion in stimulus funds -- is the toughest she
has faced yet. The stimulus funds were used to help offset the state’s portion of Medicaid costs for this year and Christie has said that the loss of these funds dictates the need for healthcare cuts.

"What started in 1965 as an entitlement program for the very low-income, the
elderly and people with disabilities has burgeoned into an expanded insurance
plan with an increasing number of people at higher income levels," Velez told
lawmakers. She promised that no one in the program now will lose coverage, and children will continue to be admitted under the rules now in effect.

Christie’s reform proposal seeks to greatly simplify and streamline the complex
Medicaid and FamilyCare programs to improve care and patient services while
saving on administrative costs. It would also move hundreds of thousands of
Medicaid patients to managed care and would add some benefit limits, premium
charges and co-pays.

Reforming FamilyCare

But the reform element that has received the most attention – despite accounting for just $9 million in savings – is Christie’s call to lower the income ceiling for parents seeking coverage under the FamilyCare program. His plan would reduce the eligibility limit to as little as $4,633 a year – or less than $90 a week -- for the single parent with two children, roughly one-fifth of the current annual income limit for parents.

Officials say this change would make the program off-limits for 23,000 parents
eligible under the current rules; this comes on top of reforms in the past two
years that advocates say could affect as many as 50,000 residents over time.

“That is just shocking in a state with one of the highest costs of living in the
nation,” said Ray Castro, a senior policy analyst with the liberal NJ Policy
Perspective. Castro called the proposed changes "even more draconian than the
ones adopted last year because they target families living in abject poverty."

The income level change for parents is included in the administration’s
Comprehensive Medicaid Waiver request, a wide-ranging reform with more
than a dozen elements that will be submitted to the federal government later
this month. The FY2012 budget, which includes $300 million in savings from
the Medicaid waiver and another $240 million in reductions that do not require
federal sign-off, must be approved by the state legislature before June 30.

FamilyCare Through the Years

October 1997 -- Federal government approves funding for Title XXI, the
Children’s Health Insurance Program, which makes funds available to states to
provide insurance to families who cannot afford private insurance, but earn too
much to qualify for Medicaid.

February 1998 – Under Gov. Christie Whitman, New Jersey launches NJ
KidCare with help from CHIP funds; program is open to children in families who
earn less than 133 percent of the federal poverty line, or about $24,645 for a
family of three today.

March 1998 -- KidCare is expanded to include children in families earning up to
200 percent FPL, or $37,060 for a parent and two kids today.

August 1999 – KidCare expanded further to accept children in families earning
up to 350 percent FPL, or $64,855 for three people today. This income limit has
remained in effect and state officials insist it will be preserved going forward.

July 2000 – KidCare program is renamed NJ FamilyCare. Parents and childless
adults (single or married) in families earning up to 100 percent FPL, or about
$18,530 today for a single mother of two kids, are admitted for the first time.

September 2001 -- Cutbacks begin. Childless adults and parents without
dependent children are no longer enrolled. By now, nearly 207,250 New
Jerseyans have enrolled in the FamilyCare program, including some 79,000 kids
and more than 128,000 adults; the program makes up less than a quarter of
those receiving subsidized insurance through the state.

June 2002 -- More cutbacks; no more parents admitted to the program. At this
point, the FamilyCare program includes nearly 273,000 patients, including almost
96,000 children and 177,000 adults.

September 2005 -- Program begins to expand again, with growth phased in over
three years. FamilyCare reopened to parents with incomes below the federal
poverty limit, or $18,530 for three today. Before this change, the program is down
to nearly 165,000 patients, including almost 110,000 kids and just over 55,000
adults -- an enrollment decline of more than 100,000 patients in three years.

September 2006 -- Expansion continues, allowing parents with incomes up to
115 percent FPL, roughly $21,300 for a three-person family today.

September 2007 -- More parents allowed in as income ceiling is raised to 133
percent FPL, or $24,645 a year for a parent and two kids. The program is now
back up to 214,500 patients; nearly 124,000 children and almost 91,000 adults.

September 2008 -- FamilyCare’s reach peaks, with income limits of up to 200
percent FPL for parents, or an annual income of $37,060 for three. Children in
families earning up to 350 percent FPL remain eligible.

January 2010 -- FamilyCare provides coverage for nearly 330,000 people,
including more than 153,000 kids and 176,000 adults – an increase of almost
165,000 in less than five years.

April 2010 -- Program cutbacks begin again. Program closed to parents who
earn more than 133 percent FPL, or $24,645 a year for three. These changes
eliminate access for 39,000 potential patients; another 8,000 recent immigrants
are also eliminated from the program during this spring.

February 2011 -- FY2012 budget proposal eliminates coverage for 1,400
FamilyCare clients who have adult children and earn too much to qualify for
general assistance benefits. Group includes about 100 participants of a program
called Health Access that dates from the early 1990s, but has since been closed
to new members.

April 2011 -- FamilyCare includes nearly 331,100 patients, including close to
171,000 children and 161,000 adults. In the past 18 months, the program saw
adult enrollment drop by roughly 15,000, but also picked up more than 16,600
children.

June 2011 -- Comprehensive Medicaid Waiver proposes further income limits
for FamilyCare that would ban parents who earn too much to qualify for general
assistance payments, a floating percentage that is currently as little as $4,633 a
year – or less than $90 a month – for a single parent with two kids. This is less
than one-third of the current income limit for parents.